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Unlocking Nigeria’s Potential In Natural Gas
Natural gas is the cleanest burning fossil fuel and is abundantly available in Nigeria, which has the largest reserves in Africa and the ninth largest in the world.
The Nigerian government has made it a priority to unlock the potential of this resource to increase domestic and industrial power supply, raise living standards and support sustainable economic growth and diversification. Nigeria currently has around seven gigawatts (GW) of installed electricity capacity but often less than four GW actually in operation. This gives it less than 10% of South Africa’s electricity generation capacity despite having more than three times the population. Unlocking Nigeria’s gas potential has been identified by the Federal Government as one of the keys to increase the capacity and reliability of electricity supply.
Shell Companies in Nigeria (SCiN) are actively involved in the development and utilisation of natural gas, pioneering its production and delivery to domestic consumers and export markets. Shell has played a key role in Nigeria’s emergence as a global player in Liquefied Natural Gas (LNG) since the 1990s through its 25.6% interest in the Nigeria Liquefied Natural Gas Company (NLNG) joint venture.
As part of its social investment, The Shell Petroleum Development Company of Nigeria Limited operated Joint Venture (SPDC JV) in partnership with NLNG and ExxonMobil provide over 98% uninterrupted power supply to homes on Bonny Island. This has positive ripple effects on the economy, environment and job creation. More than 12,200 premises are currently receiving electricity through this collaboration. A new 25-year joint Memorandum of Understanding was signed with NLNG in October 2015 that is intended to accelerate the development of Bonny communities.
SPDC JV’s market share of domestic gas has reduced through a series of divestments since 2010, which enables Nigerian companies play a more strategic role. SCiN nonetheless remain a crucial part of the national gas energy mix, with the SPDC JV’s Afam VI power plant alone contributing 14% of Nigeria’s grid-connected electricity in 2015. The Afam VI power plant is supplied by the SPDC operated Okoloma gas plant, which also supplies gas directly to the domestic market in the eastern part of the country.
Since 2010 the SPDC JV has also been producing at the Gbaran Ubie integrated oil and gas plant in Bayelsa State, which has the capacity to process one billion standard cubic feet of gas per day for the domestic and export market.
Shell Nigeria Gas Limited (SNG) supplies natural gas used as fuel for various industrial processes and power generation in the Niger Delta and to companies that specialise in the delivery of compressed natural gas to industries located far from existing pipelines. SNG carries out its operations with an all-Nigerian staff and engages the services of a range of Nigerian companies as contractors.
SCiN view natural gas as an area with significant growth potential, given the right investment conditions. SPDC JV is currently working on two projects that will deliver further reductions in gas flaring in addition to boosting the production of natural gas for domestic power generation and export.
NLNG will remain a strategic asset in a growing but increasingly competitive global LNG marketplace, in which the Shell Group has an industry-leading portfolio. The Shell Nigeria Exploration and Production Company’s (SNEPCo) growth ambitions in deep-water also include expansion of natural gas production.